16 CFR Part 310 Telemarketing Sales Rule- Debt Relief Amendments #543670-00307

Submission Number:
Ron Elwood
Mid-Minnesota Legal Assistance
Initiative Name:
16 CFR Part 310 Telemarketing Sales Rule- Debt Relief Amendments
Thank you for the opportunity to comment. A red-lined version of the proposed amendments are attached. I recommend that § 310.3(D)be amended as follows: that pending completion of the represented debt relief services, the customer’s creditors or debt collectors may pursue collection efforts, including initiation of lawsuits "AND GARNISHMENT OF WAGES OR BANK ACCOUNTS"; I propose this amendment because the existing disclosures, while relatively comprehensive, do omit this one serious consequence and this disclosure is in line with the rest. I also recommend that § 310.4(5) be amended as follows: 5) Requesting or receiving payment of any fee or consideration from a person for any debt relief service until the seller has provided the customer with documentation in the form of a "BONA FIDE" settlement agreement, debt management plan, or other such valid contractual agreement, that the particular debt has, in fact, been renegotiated, settled, reduced, or otherwise "MATERIALLY" altered "CONSISTENT WITH THE TERMS OF THE DEBT RELIEF CONTRACT EXECUTED BY THE CUSTOMER AND THE SELLER. I propose this amendment because: 1) including the phrase "bona fide" settlement is not only consistent with the language used earlier (in Section 310.3(a)(1)(viii)(A) and in Section 310.3(a)(viii)(B)) and ensures that, for this most vital aspect of the protection (the ban on advance payments) that no payment could be demanded prior to the provider documenting a BONA FIDE settlement. To further clarify what BONA FIDE means, I propose adding that the settlement offer must be consistent with the terms of the debt relief contract. This would avoid evasion of the intent of this provision by preventing the debt relief company from extracting an offer that is inconsistent with the contract but technically an offer. As to inclusion of attorneys, I asssert that they should be included. The Fair Debt Collection Practices Act (FDCPA), as amended by Congress, includes a person "who regularly collects or attempts to collect" debts owed to another. 15 U.S.C. § 1692a(6). It is well-settled that attorneys who regularly collect or attempt to collect debts are included and covered by the FDCPA. See e.g., Heintz v. Jenkins, 514 U.S. 291 (1995) (holding that the FDCPA applies to attorneys who regularly engage in consumer debt-collection litigation on behalf of third party); Crossley v. Lieberman, 868 F.2d 566, 569 (3rd Cir. 1989) (holding that the FDCPA applies to attorneys who regularly engage in debt collection activities on behalf of clients). Attorneys who "regularly provide debt relief services" should be subject to the TSR.